Columbia Journalism School | Tow Center for Digital Journalism Chapter 3 Local and Niche Sites: The Advantages of Being Small TBD.com ran into trouble right from the start. In February 2011, just six months after going live, the Washington, D.C., area’s high-profile experiment in local online journalism announced that it would lay off half of its editorial staff, detach its site from its TV-station partner and reinvent itself as a culture-and- lifestyle site. Many of those who did stay on looked for the exit as soon as they could line up another job. The reshuffling—which followed the departure of Jim Brady, the former Washington Post online executive brought in to launch the site—marked the meaningful end of one of the best-funded and best-pedigreed efforts to make professional journalism work online. The site, whose name stands for To Be De- termined, had drawn a great deal of attention for the quality of its editorial staff and for its use of social media.1 Clearly there was an important lesson here for other news sites, especially those plying the local or “hyperlocal” trade. Just what that lesson was, though, is in dispute. Does TBD’s failure prove that “hyperlocal journalism is more hype than hope,” as media analyst Alan Mutter put it?2 Or did it mainly signal a failure of nerve on the part of corporate par- ent Allbritton Communications, whose CEO, Robert Allbritton, had pledged to provide a three- to five-year runway to profitability? It is clear that the site was, as expected, losing money, despite impressive traffic growth. According to coverage in the Washington Post, unique visitors to TBD. com had risen from 715,000 in November 2010 to 838,000 in December and 1.5 million in January 2011. But, as the incoming head of the site told the paper, “It was still not generating enough [income] to offset the hefty costs.”3 Two in- siders interviewed for this report said the January traffic spike was not as striking as it looks, because much of it consisted of people looking for information on the region’s heavy snowstorms that month. Local and Niche Sites: The Advantages of Being Small 37 The Story So Far: What We Know About the Business of Digital Journalism Nobody involved has revealed the precise size of TBD’s losses. Saul Carlin, an Allbritton executive involved with TBD from the start, would say only that “traf- fic and revenue were being closely monitored. As a result, a change in manage- ment was necessary.” Brady says the picture was not that grim. The site had been budgeted to earn revenue “in the low millions” in year one; he argues it was on track to reach per- haps 75 percent of that goal. “The situation wasn’t great when I left, but it wasn’t catastrophic either,” he says. Mutter, a former journalist and media executive, took the shortfall as a dem- onstration of a fundamental misalignment between the expense of producing local reporting and the potential online revenue from it, because of the built-in constraints of small audiences and puny ad rates. Various hyperlocal flameouts support this thesis: among others, the Washington Post’s Loudoun Extra and the shuttered New York Times site for suburban New Jersey, whose audience was handed off to local start-up Baristanet. Still, mistakes were made. Brady has said repeatedly that resistance from the site’s broadcast partner WJLA, the Allbritton-owned ABC affiliate in Washington, proved a major hurdle. Both Brady and Steve Buttry, TBD’s director of com- munity engagement, said the TV staff was unhappy to see its website rolled into TBD.com—which linked out heavily to other media outlets—and that the sta- tion failed to promote TBD wholeheartedly on the air. “The first time we linked out to another TV site, that was a major collision,” says Buttry. He adds that TBD linked out more moderately after that and gave the TV news staff a “heads-up” when it planned to point to a story that WJLA had missed. “The lesson from our experience is that the legacy culture is powerful and ingrained,” he says. “Whenever its revenue stream might be endangered or disrupted, it’s going to have a big influence on decisions.” The most important example of that influence was the decision to fold TBD’s ad sales staff into WJLA’s, which led to the departure of the small digital sales team that Brady had assembled. “Selling digital is hard. I was adamant that the only way to be successful was to keep the sales force separate,” he says. The ten- sion was visible from the start, Brady adds; an example is an ambitious launch 38 Columbia Journalism School | Tow Center for Digital Journalism sponsorship of more than $75,000 that his sales team planned to pitch to a local car dealership. WJLA intervened, arguing that it would damage a valuable rela- tionship between the dealer and the TV station, Brady says. “When I was at the Post, we were routinely doing six-figure online deals,” Brady says. “If the sales force itself doesn’t believe digital is worth it, how are they going to sell it? To just assume nobody would ever spend that much online is insecurity with your own inventory.” Just as revealing as what went wrong is the list of things TBD seemed to have going for it, which help to clarify the intense interest local online news ventures have drawn for the last five years. Most important was its association with sister site Politico.com, another well-funded, generously staffed Allbritton venture led by high-profile news veterans. Like Politico, TBD promised to be not just on the Web but “of the Web,” in Brady’s phrase, meaning that it would link abundantly, deploy social media aggressively and engage closely with users. And like Politico, TBD promised to deliver to its advertisers a well-defined audience—not just generic news consumers, but people intensely interested in the particular news it had to offer. (Still, it is worth keeping in mind that at least through 2009, Politico earned more than half its revenue from its free, ad-supported print edition,4 with a circulation of about 32,000.5) TBD also sought to strike a balance between focus and scale: Visitors would be drawn in by news about their immediate environs or interests, but behind the scenes the operation could reap the “efficiencies” of serving a large metropolitan area. (Brady insists “hyperlocal” is the wrong word for what was really a regional site with a neighborhood interface.) Likewise, the site would include a mix of aggregation and firsthand reporting. To describe the site, Robert Allbritton has used the analogy of a supermarket bringing together items that previously could not be found in one place. Before TBD, he declared when the site launched, find- ing local news online was “like trying to buy groceries in the old country. First you went to the fishmonger, then to the baker, then to the grocer, and so on.”6 Other hyperlocal ventures have tried to apply versions of that idea on a na- tional scale. A good recent example is Main Street Connect, a “national commu- nity news company” that went live in 2009 and consists, so far, of 10 sites serv- ing towns in Fairfield County, Conn. The separate sites share editorial resources Local and Niche Sites: The Advantages of Being Small 39 The Story So Far: What We Know About the Business of Digital Journalism (neighboring communities see many of the same articles), technology infrastruc- ture and an ad sales team. “We’ll soon be bringing our vision to other groups of towns,” Main Street’s web site promises. “Watch for us.”7 By far the grandest of the new hyperlocal journalism ventures is the nation- wide Patch network, which was bought by a struggling AOL in 2009. With sites in 700 communities and counting as of March 2011, each led by a local editor making $40,000 to $50,000 a year, Patch has turned AOL into one of the big- gest sources of new journalism jobs in the country. Visitors to a local Patch site see news and information about a specific community, written and curated by people in that community, whether it’s Dublin, Calif., or Dunedin, Fla. (In March 2011, AOL also bought Outside.in, a hyperlocal network that automatically ag- gregates news, blog posts, police reports and other public data, and says it is in 57,830 neighborhoods. Reports suggest AOL was interested in the underlying technology more than the business itself.8) To run all of those Patch sites, AOL can count on centralized resources like a massive in-house ad network, a sales force with ties to national brands, and sophisticated search engine optimization technology for maximizing the mean- ingful lifespan—and thus the economic return—of every piece of content it produces. Like McDonald’s, AOL uses sophisticated market research to assess the commercial potential of the communities where it is considering planting the Patch flag. (According to a New Yorker profile of AOL chief executive officer Tim Armstrong, the Patch formula considers 59 factors, from average incomes to voter turnout.9) The same infrastructure supports AOL’s growing stable of niche or “vertical” content sites, anchored by acquisitions such as the martial-arts blog MMAFight- ing.com, the tech-industry site TechCrunch and the sprawling Huffington Post, which AOL bought for $315 million in 2011. It’s no exaggeration to say that AOL, whose original business model (providing dial-up access to the Internet) is badly out of date, has staked its declining fortunes on local and niche journalism.